3.In order to simplify our discussion, we assume that the new technology does not affect the effectiveness of 2x, or ( )21γψ→. Under this assumption the derived demand for each input becomes ()( ) ()()() () ()()122 122 1 122112 12*11222112212112 1 111 2 112122 12*2121122121,,,Aap Aap Aw AwxpwwpAAAwAγψ −γψ +− γψψ=−γψ+ γψψ4.In order to examine the effect of the technological change on each derived demand, we take the derivative of each of the demand curves in equation 5 with respect to ψas ( )11yielding ()()()()()11*11212222 122112212112212112222 112212112212*21212111212112212112 111 2112121122122AapAapAw AwAAA pAap Aap AwAapAa′∂ψ−+−γ=−∂ψ−′−−γψ+−′−−+γ∂ψ−′−+γψ+−ψψII.

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